Imagine you are a policymaker. You are told by your officials there is an opportunity to save the country up to $3.6 billion annually, achieve major cuts to carbon emissions, and increase our economic and social resilience. What do you do?
Sadly – and perplexingly – the response from our Government seems to be “yeah nah”. The new Draft National Energy Efficiency and Conservation Strategy 2017-2022, currently out for public consultation, is resoundingly weak and unambitious. It sets the bar so low that – even if “successful” – New Zealand will continue to miss those opportunities and slip further behind other countries on energy productivity.
To be blunt, it’s the kind of strategy you have when you don’t want a strategy at all.
Here’s a look at what’s inside, and what could be done to improve it. You can make a submission before 5pm Tuesday 7 February.
Points for honesty
To its credit, the draft Strategy has the odd moment of refreshing candour. In particular, it twice acknowledges that “New Zealand’s energy productivity improvement is lagging behind other countries such as the US, UK and Australia.” Energy productivity is how much wealth (defined by GDP) we generate from each unit of energy we consume.
A fuller picture would state that New Zealand (along with the US and Australia) is well down the ranks in our overall energy productivity. A 2015 global assessment ranked New Zealand 78th, 11% below the OECD average and 26% below the EU. We are in almost the same position when ranked by percentage improvement from 2001-2011; just above the world average.
However, rather than seeking real change to our situation, the Strategy seems to admit defeat from the outset.
The Strategy contains just two national targets:
- Process heat: Industrial emissions intensity decreases by an average of 1% per year from 2017 and 2022.
- Transport: Electric vehicles make up 2% of the vehicle fleet by the end of 2021.
These are both good focus areas, but inadequate on their own. The critical point, though, is this: both of these targets are what is projected to happen anyway under business-as-usual.
A factsheet on the process heat target actually says this explicitly: “emissions intensity fell by 1.0 per cent per annum on average between 1990 and 2014, and [is forecast] to continue out to 2022.”
The electric vehicles target (already announced last May under an EV policy package) translates to around 64,000 EVs on the road. Sure enough, modelling presented by the Ministry of Transport in 2015 (before the EV package was introduced) projected cumulative EV sales would reach 64,729 by the end of 2021.
So both targets will likely be achieved without the government needing to lift a finger. Better than having no targets at all – but barely.
Consistent with the weak targets, the Strategy is very light on substance. It sets out just two new supporting actions beyond what is already happening:
- “Develop and implement a Process Heat Action Plan, with policies and programmes to improve efficiency of existing process heat plant, and encourage investment in efficient and renewable plant”
- “Explore options for the accelerated uptake of more energy efficient and intelligent land transport technology (e.g. Smart Traffic Management)”
If the extent of your strategy update is to “develop a plan” and “explore options”, you are doing it wrong. This begs the question of what our Government has been doing for the last several years. Did the dog eat their homework?
In its defense, the Strategy states that it “does not include a full list of government energy efficiency and renewable initiatives”. But why not just pull these all together into the one document? This is supposed to be the overarching statement of government policy on energy efficiency and renewable energy. The lack of coherence and coordination across arms of government is part of the problem.
The Strategy has many glaring gaps and deficiencies.
The previous 2011-2016 strategy had an economy-wide energy intensity target. While the target – a 1.3% annual improvement – was also set to just continue the business-as-usual forecast, this metric is a key one.
But not only is an economy-wide efficiency target missing from the new strategy, there is bizarrely no information about whether the previous target was actually achieved. After some digging, it appears that it was. According to data from MBIE, the average energy intensity decreased by 1.5% per year over 2011-15. Great – so why not set a more ambitious target for the next period?
On transport, there are no targets or new actions to improve efficiency across the rest of the vehicle fleet (including trucks). The Strategy actually acknowledges that: “The fuel economy of vehicles entering our fleet is poor compared with other countries, and improvements in reported performance have stalled since 2013.”
The elephant in the room here is New Zealand’s lack of any fuel efficiency standards. These would require vehicle importers to steadily improve the average fuel efficiency of new vehicles sold in New Zealand. With Australia now planning to adopt such standards, New Zealand will be all but alone among developed countries – except for our old dodgy carbon-credit trading partners, Russia. Adopting international fuel efficiency standards is probably the biggest single step the Government could take to improve energy efficiency in New Zealand.
On process heat, the weak emissions intensity target will likely see total emissions in the sector continue to grow. To avoid that, the intensity target should be significantly strengthened and/or supplemented with an absolute emissions reduction target for the sector. The Strategy also needs to clearly lay out how this will be achieved (e.g. through the proposed Process Heat Action Plan). One obvious focus is to prevent new coal boilers being installed and develop a support package for improving efficiency and replacing existing ones.
On electricity, the Strategy references the existing Government goal of 90% renewable electricity by 2025, but doesn’t actually restate this as an official target (giving it legal weight). There is no real reason not to, so it’s a bit suspicious.
Unlike the other two targets, getting to 90% renewable electricity will actually require additional government action. There are still no clear plans or measures to ensure this is achieved, and several experts do not think it will happen under current policies. The Strategy should set policy actions to ensure the electricity target is met. For example, the Electricity Authority could be given a mandate to do so.
Finally, it’s worth highlighting that the Strategy doesn’t commit any new funding. This is concerning as funding for EECA and its energy efficiency programmes is in fact declining with the wind-up of household insulation grants. Currently the total budget is set to fall from $55.4 million in 2015/16 to $30.4 million in 2019/20 – a 45% cut. If the Government is serious about improving New Zealand’s poor energy productivity, it needs to put more money where its mouth is.
The Draft Energy Efficiency and Conservation Strategy acknowledges New Zealand is falling behind on energy productivity, but sets a deliberate direction to continue as we are. The main message that policy makers need to hear is that business-as-usual is not good enough.
EECA estimates we could save up to 20% of our current energy use through improving energy efficiency. This would amount to major cuts to carbon emissions and savings of $3.6 billion annually. There are many policy actions New Zealand could take towards achieving this. What’s needed is a commitment to drive real change.
The Energy Efficiency and Conservation Strategy 2017-2022 should:
- Set an economy-wide energy efficiency target more ambitious than the previous strategy;
- Set further targets and policy actions in the transport sector, including fuel efficiency standards;
- Strengthen the process heat target and/or set an accompanying target to reduce total emissions in the sector, and develop an ambitious plan of new policy actions to achieve this;
- Reinstate the 90% renewable electricity target and set policies to ensure this is met;
- Bring all actions on energy efficiency and renewables into a coherent, comprehensive and well-funded government strategy.
 Energy intensity is the inverse of energy productivity (i.e. energy consumed per unit of GDP).
 Calculated from the ‘Energy indicators’ spreadsheet published with Energy in New Zealand 2016.
 See Table 1, EECA Statement of Performance Expectations 2016
 See page 2, EECA Statement of Performance Expectations 2016